Banking News

The prospect of record low savings rates continuing is forcing many savers to review how they allocate their capital in an attempt to achieve the level of returns they have previously enjoyed. Investing in the stock market inevitably involves putting your capital at risk however there is a middle ground which continues to attract increasing interest – the structured deposit. With this in mind, we take a deeper look at this savings alternative to help understand why more and more savers are starting to see their appeal. more

With the current economic environment asking savers far more questions than it gives answers, it is good to know that there are alternatives available. We take a look at one such alternative that is proving particularly popular as savers face the harsh reality that the more traditional fixed rate savings products are failing to meet their needs. more

Millions of savers are facing the harsh realisty that there is little hope of change to interest and savings rates in the coming years. However, those with Cash ISAs do have one further option to consider – the ISA transfer. We take a closer look at why this is becoming a rising trend as well as what this could mean for those looking for the potential to improve the returns from their capital. more

With so many savers joining income investors in the hunt for high yields, being able to quickly understand and compare the numerous options available has become even more important. We therefore compare two of our most popular income investments to help understand what is driving their popularity and why they might meet your income needs. more

Banks' reluctance to lend standing in way of Northern Rock rescue

08 January 2008 / by Rachael Stiles

Hope is fading fast for a viable recovery of Northern Rock, as lenders are becoming reluctant to provide potential buyers Virgin and Olivant with sufficient funding to take over the struggling bank which was hit hard by the credit crisis.

A solution is looking less likely which will not disappoint shareholders and leave taxpayers footing the bill for its Bank of England loan, which currently stands at an estimated £26 billion, if it goes into administration or is nationalised.

The backers lined up to provide the £15 billion loan required by the successful bidder are Citigroup, Royal bank of Scotland and Deutsche Bank; they are said to be getting cold feet about the deal as a result of the continued effects of the credit crisis and the dwindling property market which has a pessimistic outlook for 2008.

In line with European laws regarding state aid, the Government only has until the end of February to find a solution to the Northern Rock problem, one way or another, or face accusations from the European Commission of giving illegal assistance to a private company.

Northern Rock's shareholders stand to lose out if a take over cannot be arranged, so SRM and RAB Capital – two hedge funds which collectively own 17 per cent of the bank – have called an emergency meeting where, for the first time, Northern Rock's 14,000 shareholders will have the opportunity to publicly voice their concerns regarding its future and the poor management which landed it in its current precarious position.

The two hedge funds are expected to propose changes to current procedure, which will prevent the board from making hasty decisions without shareholders' consent; the new safeguards will mean the board must seek approval from a shareholder vote if they wish to sell more than five per cent of its assets.